Recent changes in the healthcare industry, and in the practices and policies of insurance companies and other healthcare payers, have required patients to pay for an increasing portion of their healthcare costs. In particular, the amounts of healthcare insurance copayments and deductibles have risen dramatically for many patients, even while the coverage afforded by healthcare insurance policies has often decreased.
As a result of the foregoing, the frequency with which healthcare service providers must look to patients for significant portions of healthcare costs has increased, and the average dollar amount of the patient's responsibility for healthcare services has also risen. Consequently, healthcare service providers (and the revenue cycle management companies that work with them) have been forced to spend increasing time and resources on patient collection efforts for services rendered. Patient collections are exceedingly complex due, in part, to the lapse of time between the rendering of services by the healthcare service provider, and the presentation of a patient invoice after the healthcare payer has paid the claim. This process, along with the aforementioned trends in the healthcare industry, have increased transaction costs for healthcare service providers, and have also increased the financial risk associated with failed collection efforts for healthcare service providers.
In some cases, efforts have been made to overcome these problems by estimating the cost of required healthcare services, and then collecting the estimated cost from the patient upfront. However, the legality of this approach is currently being challenged. Moreover, this type of approach requires the availability and ongoing maintenance of a contract management system or fee schedule, which may be overkill for the needs of many organizations.
Another problem with the foregoing approach is that it may create conflicts between revenue cycle management companies and entities such as hospitals, the latter of which frequently have “not-for-profit” mission statements or have prioritized the provision of timely, quality healthcare services over remuneration for those services. In addition, up-front collections, prior to a final determination of patient responsibility, places a financial hardship on many patients. Upfront collections of this type also pose administrative challenges for healthcare service providers, who must typically return overpayments—or go back to the patient for underpayments—based on insurance determinations that are made after services have been rendered.